OnKure Therapeutics, Inc. 10-Q

Item 1. Financial Statements ONKURE THERAPEUTICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) March 31, December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 96,661 $ 110,761 Prepaid expenses and other current assets 1,511 2,242 Total current assets 98,172 113,003 Property and equipment, net 925 1,025 Operating lease right-of-use asset 676 770 Other assets 109 109 Total assets $ 99,882 $ 114,907 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 2,344 $ 2,968 Accrued expenses 5,895 7,026 Operating lease liabilities, current portion 546 536 Total current liabilities 8,785 10,530 Long-term operating lease liabilities 409 549 Other long-term liabilities 40 — Total liabilities 9,234 11,079 Commitments and contingencies Stockholders’ equity: Common stock, Class A, $ 0.0001 par value; 200,000,000 shares authorized; 12,755,348 and 12,660,590 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively 1 1 Common stock, Class B, $ 0.0001 par value; 10,000,000 shares authorized; 686,527 shares issued and outstanding at both March 31, 2025 and December 31, 2024 — — Additional paid-in capital 261,296 258,551 Accumulated deficit ( 170,649 ) ( 154,724 ) Total stockholders’ equity 90,648 103,828 Total liabilities and stockholders’ equity $ 99,882 $ 114,907 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 ONKURE THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) Three Months Ended March 31, 2025 2024 (in thousands, except share and per share amounts) Operating expenses: Research and development $ 13,012 $ 8,566 General and administrative 3,988 1,265 Total operating expenses 17,000 9,831 Loss from operations ( 17,000 ) ( 9,831 ) Other income: Interest income 1,075 295 Net loss and comprehensive loss $ ( 15,925 ) $ ( 9,536 ) Net loss per share attributable to common stockholders: Basic and diluted $ ( 1.19 ) $ ( 30.37 ) Weighted average shares outstanding: Basic and diluted 13,424,335 314,016 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 ONKURE THERAPEUTICS, INC CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (in thousands, except share information) (Unaudited) Additional Total Convertible Preferred Stock Class A Common stock Class B Common stock Paid-In Accumulated Stockholders' Shares Amount Shares Amount Shares Amount Capital Deficit Equity (Deficit) Balance, December 31, 2023 6,840,620 $ 129,825 313,747 $ — — $ — $ 209 $ ( 102,051 ) $ ( 101,842 ) Issuance of Class A Common Stock for cash upon the exercise of stock options — — 1,002 — — — 10 — 10 Share-based compensation expense — — — — — — 107 — 107 Net loss — — — — — — — ( 9,536 ) ( 9,536 ) Balance, March 31, 2024 6,840,620 129,825 314,749 — — — 326 ( 111,587 ) ( 111,261 ) Issuance of Class A Common Stock for cash upon the exercise of stock options — — 1,130 — — — 10 — 10 Share-based compensation — — — — — — 1,813 — 1,813 Net loss — — — — — — — ( 14,139 ) ( 14,139 ) Balance, June 30, 2024 6,840,620 129,825 315,879 — — — 2,149 ( 125,726 ) ( 123,577 ) Issuance of Class A Common Stock for cash upon the exercise of stock options — — 344 — — — 6 — 6 Share-based compensation — — — — — — 77 — 77 Net loss — — — — — — — ( 11,556 ) ( 11,556 ) Balance, September 30, 2024 6,840,620 129,825 316,223 — — — 2,232 ( 137,282 ) ( 135,050 ) Conversion of Convertible Preferred Stock for Class A and B Common Stock in connection with the Merger ( 6,840,620 ) ( 129,825 ) 6,154,093 1 686,527 — 129,824 — 129,825 Issuance of Class A Common Stock in the Concurrent Financing, less issuance costs — — 2,571,736 — — — 54,428 — 54,428 Issuance of common stock to former stockholders of Reneo Pharmaceuticals, Inc. in the reverse recapitalization — — 3,343,604 — — — 65,499 — 65,499 Reverse recapitalization transaction costs of OnKure — — — — — — ( 2,085 ) — ( 2,085 ) Issuance of Class A Common Stock for the conversion of Convertible Promissory Notes — — 267,269 6,120 6,120 Issuance of Class A common stock for the settlement of restricted stock units — — 7,700 — — — — — — Adjustment for fractional shares in the reverse recapitalization — — ( 35 ) — — — — — — Share-based compensation — — — — — — 2,533 — 2,533 Net loss — — — — — — — ( 17,442 ) ( 17,442 ) Balance, December 31, 2024 — $ — 12,660,590 $ 1 686,527 $ — $ 258,551 $ ( 154,724 ) $ 103,828 Vesting of restricted stock units, net — — 94,758 — — — — — — Share-based compensation — — — — — — 2,745 — 2,745 Net loss — — — — — — — ( 15,925 ) ( 15,925 ) Balance, March 31, 2025 — $ — 12,755,348 $ 1 686,527 $ — $ 261,296 $ ( 170,649 ) $ 90,648 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 ONKURE THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 15,925 ) $ ( 9,536 ) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation expense 2,745 107 Depreciation and amortization 118 114 Amortization of right-of-use asset - operating 94 37 Change in operating assets and liabilities: Prepaid and other assets 731 437 Accounts payable, accrued and other liabilities ( 1,678 ) ( 1,738 ) Lease liabilities ( 130 ) ( 50 ) Other long-term liabilities 40 — Net cash used in operating activities ( 14,005 ) ( 10,629 ) Cash flows from investing activities: Purchases of property and equipment ( 18 ) ( 9 ) Net cash used in investing activities ( 18 ) ( 9 ) Cash flows from financing activities: Payment of issuance costs associated with the Concurrent Financing ( 37 ) — Payment of reverse recapitalization transaction costs ( 40 ) — Proceeds from the issuance of common stock in connection with equity plans — 10 Net cash (used in) provided by financing activities ( 77 ) 10 Net decrease in cash and cash equivalents ( 14,100 ) ( 10,628 ) Cash and cash equivalents, beginning of period 110,761 29,876 Cash and cash equivalents, end of period $ 96,661 $ 19,248 Supplemental cash flow information: Interest paid $ — $ — The accompanying notes are an integral part of these condensed consolidated financial statements. 9 ONKURE THERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization and Business OnKure Therapeutics, Inc. (“OnKure” or the “Company”) is a clinical-stage biopharmaceutical company focused on the discovery and development of precision medicines that target biologically validated drivers of cancers that are underserved by available therapies. Using a structure- and computational chemistry-driven drug design platform, OnKure is committed to improving clinical outcomes for patients by building a pipeline of small molecule drugs designed to selectively target specific mutations thought to be key drivers of cancer. The Company was formed in 2014 as Reneo Pharmaceuticals, Inc. (“Reneo”) under the laws of the State of Delaware. On October 4, 2024, the Company changed its name to OnKure Therapeutics, Inc. Merger with Reneo On October 4, 2024, Radiate Merger Sub I, Inc. (“Merger Sub I”) a wholly-owned subsidiary of Reneo completed its merger with and into OnKure, Inc. (referred to herein as “Legacy OnKure”), with Legacy OnKure continuing as the surviving entity as a wholly-owned subsidiary of Reneo. This transaction is referred to as the “Merger.” Following the Merger, Reneo changed its name to OnKure Therapeutics, Inc. Legacy OnKure remains as a wholly-owned subsidiary of the Company, and, together with the Company, is referred to as the “Combined Company” below. The Merger was effected pursuant to an Agreement and Plan of Merger, dated as of May 10, 2024 (the “Merger Agreement”), by and among Reneo, Radiate Merger Sub I, Inc., a Delaware corporation Radiate Merger Sub II, LLC, a Delaware limited liability company (“Merger Sub II”), and Legacy OnKure. In connection with the Merger Agreement, certain parties entered into a subscription agreement with the Company to purchase shares of Reneo’s common stock for an aggregate purchase price of $ 65.0 million contingent upon the concurrent consummation of the Merger (the “Concurrent Financing”). On October 4, 2024 (the “Closing Date”), the Merger and the Concurrent Financing closed. The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“GAAP”). For accounting purposes, Legacy OnKure is considered the accounting acquirer and Reneo is the acquired company based on the terms of the Merger Agreement and other factors, such as relative voting rights and the composition of the Company’s board of directors and senior management. Accordingly, the Merger was treated as the equivalent of Legacy OnKure issuing stock to acquire the net assets of Reneo. As a result of the Merger, the net assets of Reneo were recorded at their acquisition-date fair value in the financial statements of the Combined Company and the reported operating results prior to the Merger are those of Legacy OnKure. Legacy OnKure’s historical financial statements became the historical consolidated financial statements of the Combined Company. All issued and outstanding Legacy OnKure common stock, convertible preferred stock, restricted stock units, and options to purchase common stock prior to the effective date of the Merger have been retroactively adjusted to reflect the exchange ratio for all periods presented . See Note 3 for further discussion . Risks and Uncertainties The board of directors of the Company (the “Board”) discusses with management macroeconomic and geopolitical developments, including inflation, instability in the banking and financial services sector, tightening of the credit markets, international conflicts, cybersecurity, tariffs, and sanctions so that the Company can be prepared to react to new developments as they arise. The Board and the management of the Company are carefully monitoring these developments and the resulting economic impact on the Company’s financial condition and results of operations. Liquidity The Company had recurring losses from operations, an accumulated deficit of $ 170.6 million and cash and cash equivalents of $ 96.7 million as of March 31, 2025. The Company’s ability to fund its ongoing operations is 10 highly dependent upon raising additional capital through the issuance of equity securities, issuing debt or other financing vehicles. The Company’s ability to secure capital depends on its success in discovering and developing its drug candidates. The Company cannot provide assurance that additional capital will be available on acceptable terms, if at all. The issuance of additional equity or debt securities will likely result in substantial dilution to the Company’s stockholders. Should additional capital not be available to the Company in the near term, or not be available on acceptable terms, the Company will be required to modify its operational plans and may be unable to realize value from its assets or discharge its liabilities in the normal course of business, which may, among other alternatives, cause the Company to delay, substantially reduce, or discontinue operational activities to conserve cash, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. Changing circumstances, including due to macroeconomic and geopolitical effects outside of the Company’s control, may cause the Company to consume capital significantly faster or slower than currently anticipated. The estimates included herein are based on assumptions that may prove to be wrong, and the Company could exhaust its available financial resources sooner than currently anticipated. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. Management believes the Company’s cash and cash equivalents will be sufficient to fund its current operating plan for at least the next 12 months from the date of issuance of these condensed consolidated financial statements. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with GAAP for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, since they are interim statements, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. The Company’s consolidated financial statements reflect the operation of the Company and its wholly owned subsidiary OnKure, Inc. All intercompany balances and transactions among the consolidated entities have been eliminated in consolidation. See Notes 1 and 3 for further discussion . In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Form 10-K. Segment Information The Company operates in one operating segment: clinical research. All equipment and other property and equipment are physically located within the United States . As a result of the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, the Company has presented the three months ended March 31, 2024 amounts consistent with the corresponding 2025 period presentation. Use of Estimates The preparation of the Company’s consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Although these estimates are based on the Company’s knowledge of current events and actions it may take in the future, actual results may ultimately differ from these estimates. The most significant estimates relate to external research and development expenses, and the fair value of stock options and restricted stock units . 11 Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss was the same as its reported net loss for all periods presented. Research and Development Expenses Research and development (“R&D”) costs are expensed as incurred in performing research and development activities. The costs include employee-related expense, including salaries, severance, benefits, share-based compensation, costs of research and development activities conducted by third parties on the Company’s behalf, costs to have clinical trial materials manufactured, fees for acquiring and maintaining licenses under third-party license agreements, consulting fees, depreciation, and facilities and overhead costs. Accrued Research and Development Expenses The Company records research and development expenses in the period in which it receives or takes ownership of the applicable goods or when the applicable services are performed. The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, consultants, and contract research organizations, in connection with conducting research and development activities. The financial terms of these contracts are subject to negotiations, vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company reflects research and development expenses in its financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of its preclinical studies or clinical trials, as measured by the timing of various aspects of the study or related activities. The Company determines accrual estimates through a review of the underlying contracts along with the preparation of financial models considering discussions with research and other key personnel as to the progress of studies, trials, or other services being conducted. During a study or trial, the Company adjusts its rate of expense recognition if actual results differ from its estimates. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as an expense in the period that the related goods are consumed, or services are performed. Share-Based Compensation The Company maintains an equity incentive compensation plan under which incentive stock options and nonqualified stock options to purchase common stock, and restricted stock units for common stock, are granted to employees, board of directors, and non-employee consultants. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service or performance period. The fair value of stock options granted to employees is estimated using the Black-Scholes option pricing model. The Black-Scholes valuation method requires certain assumptions be used as inputs, such as the fair value of the underlying common stock, expected term of the option before exercise, expected volatility of the Company’s common stock, risk-free interest rate and expected dividend. Options granted have a maximum contractual term of 10 years . The Company has limited historical stock option activity and therefore estimates the expected term of stock options granted using the simplified method, which represents the arithmetic average of the original contractual term of the stock option and its weighted-average vesting term. The expected volatility of stock options is based on the historical volatility of several publicly traded companies in similar stages of clinical development. The Company will continue to apply this process until enough historical information regarding the volatility of its stock price becomes available. The risk-free interest rates used are based on the U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. treasury notes with maturities approximately equal to the expected term of the stock options. The Company has historically not declared or paid any dividends and does not currently expect to do so in the foreseeable future, and therefore has estimated the dividend yield to be zero. (See Note 10). The Company recognizes stock-based compensation expense for grants under its various equity incentive plans and employee stock purchase plan. The Company accounts for all stock-based awards granted to employees and directors at their fair value and recognizes compensation expense over the award’s vesting period. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates of fair values of 12 stock options as of the grant date. The Company calculates the grant date fair values of stock options using the Black-Scholes valuation model, which requires the input of subjective assumptions, including but not limited to expected stock price volatility over the term of the awards and the expected term of stock options. The fair value of restricted stock awards granted to employees is based on the quoted closing market price per share on grant date. Fair Value of Financial Instruments The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The carrying amounts of the Company’s financial assets and liabilities, such as cash, receivables, prepaid and other current assets, accounts payable, and accrued expenses approximate their fair values because of the short maturity of these instruments. Cash and Cash Equivalents All highly liquid investments with maturities of 90 days or less, at the time of purchase, are classified as cash equivalents. Cash equivalents are reported at cost, which approximates fair value. The Company’s cash and cash equivalents consist of money held in demand depository accounts and money market funds. The carrying amount of cash and cash equivalents was $ 96.7 million and $ 110.8 million as of March 31, 2025 and December 31, 2024, respectively, which approximates fair value and was determined based upon Level 1 inputs. The money market account is valued using quoted market prices with no valuation adjustments applied and is categorized as Level 1 . Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains accounts in federally insured financial institutions. At times, amounts held in federally insured accounts are above the federally insured limit of $ 250,000 . Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made . Leasing – Lessee Accounting The Company determines if an arrangement is a lease at inception. The Company’s operating lease agreements are primarily for office space and research labs. For operating leases with a term greater than one year, the Company recognizes the right-of-use (“ROU”) assets and lease liabilities related to the lease payments on its balance sheet. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The ROU assets represent the Company’s right to use the underlying assets for the term of the lease and the lease liabilities represent the Company’s obligation to make lease payments arising for the agreements. ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The ROU asset is periodically reviewed for impairment unless a triggering event occurs. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments, except for the ones that depend on index or rate, are excluded from the calculation of the ROU assets and lease liabilities and are recognized as variable lease expense in the statements of operations and comprehensive loss in the period in which they are incurred. Sublease inflows are netted against the respective lease outflows. As the interest rate implicit in the Company’s leases is not readily determinable, the Company uses its estimated incremental borrowing rate in its present value calculations. One of the Company’s lessee agreements include an option to extend the lease, which the Company does not include in its minimum lease term unless it is reasonably certain to exercise such option. Operating leases with a term of less than one year are recognized as a lease expense over the term of the lease, with no asset or liability recognized on the balance sheet. Recently Issued Accounting Pronouncemen ts In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. The requirements of the ASU are effective for annual periods 13 beginning after December 15, 2024, with early adoption permitted. This ASU may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this pronouncement. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This ASU requires more detailed disclosures, on an annual and interim basis, about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. This ASU may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this pronouncement. The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any accounting pronouncements issued through the date of this report will have a material impact on its financial statements. 3. Merger Agreement and Concurrent Financing As described in Note 1, Merger Sub I merged with and into Legacy OnKure, with Legacy OnKure surviving as a wholly owned subsidiary of the Company on October 4, 2024. At the Closing, each then-outstanding share of Legacy OnKure common stock was converted into the right to receive 0.023596 shares of common stock of Reneo based on an exchange ratio (the “Common Exchange Ratio”), which was reclassified as Class A Common Stock in connection with the Merger, and each then-outstanding share of Legacy OnKure preferred stock was converted into the right to receive 0.144794 shares of Class A Common Stock based on an exchange ratio (the “Preferred Exchange Ratio”); provided that one holder of Legacy OnKure preferred stock elected to receive 686,527 shares that it would otherwise have received in the form of Class A Common Stock in an equal number of shares of Class B Common Stock. Upon the closing of the Merger, (i) an aggregate of 6,470,281 shares of Class A Common Stock and 686,527 shares of Class B Common Stock of the Company were issued in exchange for the shares of Legacy OnKure capital stock outstanding as of immediately prior to the Closing and (ii) outstanding shares of Reneo common stock were reclassified into an aggregate of approximately 3,343,604 shares of Class A Common Stock. In connection with the Merger Agreement, Reneo entered into a subscription agreement with certain investors, pursuant to which the investors subscribed for and purchased, concurrent with the closing of the Merger, an aggregate of 2,839,005 shares of Class A Common Stock at a price of approximately $ 22.895 per share for aggregate gross proceeds of approximately $ 65.0 million , including the conversion of previously funded Convertible Promissory Notes principal of $ 6.0 million and accrued interest thereon of $ 120 thousand, on October 4, 2024. At the effective time of the Merger, the authorized shares of Class A Common Stock of the Company were 200,000,000 with par value of $ 0.0001 , and Class B Common Stock of the Company were 10,000,000 with par value of $ 0.0001 . The Merger was accounted for as a reverse recapitalization in accordance with GAAP, with Legacy OnKure as the accounting acquirer of Reneo. Legacy OnKure was determined to be the accounting acquirer based on the terms of the Merger Agreement and other factors, such as relative voting rights and the composition of the Company’s board of directors and senior management. As a result, Legacy OnKure’s historical financial statements became the historical consolidated financial statements of the Combined Company for accounting purposes together with a deemed issuance of shares, equivalent to the shares held by the former stockholders Reneo, the legal acquirer, and a recapitalization of the equity of Legacy OnKure, the accounting acquirer. The final transaction amounts have been recorded as a reduction of proceeds in stockholders’ equity. At the effective time of the Merger, the net assets of Reneo were recorded at their acquisition-date fair value in the financial statements of the Combined Company, which approximated book value due to the short-term nature. Reneo’s development programs had ceased prior to the Merger and were deemed to be de minimis in value at the transaction date. No goodwill or intangible assets were recognized. 14 As part of the recapitalization, excluding the Concurrent Financing, the Company acquired the assets and liabilities listed below (in thousands): Amount Cash and cash equivalents $ 57,736 Short-term investments 15,979 Other current assets 690 Other assets 553 Accrued expenses ( 9,072 ) Long-term operating lease liability ( 387 ) Net assets acquired $ 65,499 4. Segment The Company is a publicly listed company focused on the development of clinical and pre-clinical product candidates with a single reportable segment: clinical research . Because the Company has one reportable segment, before adopting the ASU, it provided only the entity-wide disclosures required by ASC 280. The accounting policies of the clinical research segment are the same as those described in the summary of significant accounting policies. The Company has yet to generate revenue and anticipates substantial expenses and operating losses as it advances its product candidates through clinical trials and regulatory processes. The Chief Operating Decision Maker (“CODM”) assesses financial performance primarily using operating expenses as reported on the statement of operations, supplemented by internal budget and forecast models to guide resource allocation and performance evaluation. Segment assets are reported as total assets on the Company’s consolidated balance sheet, and segment loss is reflected as net loss in the Company’s consolidated statements of operations and comprehensive loss, effectively mirroring the Company’s overall financial position due to its single-segment structure . The Company does not have intra-entity sales or transfers. The Company’s CODM is the senior executive committee that is comprised of the Chief Financial Officer and the Chief Executive Officer . Clinical Research Segment Three Months Ended March 31, 2025 2024 (in thousands) Operating expenses: Direct program expense $ 7,872 $ 5,353 Indirect program expense 526 517 Workforce salaries and benefits 4,407 3,355 Share-based compensation expense 2,745 107 General corporate expenses 1,450 499 Segment net loss 17,000 9,831 Reconciliation of loss: Interest income ( 1,075 ) ( 295 ) Adjustments and reconciling items ( 1,075 ) ( 295 ) Net loss $ 15,925 $ 9,536 15 5 . Leases The Company’s headquarters are located in Boulder, Colorado, where it leases 14,790 square feet of office and lab facilities under operating leases that expire in December 2026 , with rights to extend for a five-year period . In the Merger with Reneo, the Company assumed the lease in Irvine, California, where it leases office space under a lease agreement that expires in November 2026 (the “Irvine lease”). In January 2025, the Company entered into a sublease on the Irvine lease for all of the leased square footage, which expires in November 2026. Payments under the sublease for the three months ended March 31, 2025 were $ 53 thousand and were netted against operating lease costs in the Statement of Operations. Right-of-use assets and lease liabilities for operating leases as included in the Company’s financial statements are as follows (in thousands): March 31, 2025 December 31, 2024 Operating lease right-of-use assets $ 676 $ 770 Current operating lease liabilities 546 536 Noncurrent operating lease liabilities 409 549 Total lease liabilities $ 955 $ 1,085 Lease expense for operating leases, net of sublease receipts, as included in the Company’s financial statements are as follows (in thousands): Three Months Ended March 31, 2025 2024 Operating lease cost $ 51 $ 44 Variable lease expense 45 47 Lease term, discount rates, and additional information for operating leases are as follows (in thousands): Three Months Ended March 31, 2025 2024 Weighted-average remaining lease term - operating leases (years) 1.72 2.75 Weighted-average discount rate - operating leases 4.5 % 4.5 % Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 140 $ 53 The aggregate maturities of the Company’s operating lease liabilities were as follows as of March 31, 2025 (in thousands): Remaining in 2025 $ 431 2026 560 Total future minimum lease payments 991 Less: imputed interest ( 36 ) Less: Current portion ( 546 ) Operating lease liability, net of current portion $ 409 16 6 . Net Loss Per Share The Company computes basic loss per share by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share assumes the conversion, exercise, or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock shares to be issued upon if-converted method for the convertible Series C Preferred Stock, exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the three months ended March 31, 2024 because such shares are anti-dilutive. Common stock shares to be issued upon exercise of all outstanding stock options and restricted stock units were excluded from the diluted net loss per share calculation for the three months ended March 31, 2025 because such shares are anti-dilutive. Anti-dilutive securities outstanding during the period not included in the diluted net loss per share calculation include the following : March 31, 2025 2024 Outstanding common stock options 3,045,385 188,521 Unvested restricted stock units 137,064 213,819 3,182,449 402,340 7 . Fair Value Measurements ASC Topic 820, Fair Value Measurement , establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. ASC Topic 820 identifies fair value as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes between the following: • Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs, other than quoted prices in active markets, which are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s financial assets are subject to fair value measurements on a recurring basis. The Company categorizes its money market funds as Level 1, using the quoted prices in active markets. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets. No assets or liabilities were transferred into or out of their classifications during the three months ended March 31, 2025 and 2024. As part of the Merger, the Company acquired, and disposed of shortly thereafter, certain short-term investments in debt securities that were carried at fair value and classified as current assets available-for-sale and 17 represented the investment of funds available for current operations. The Company had no available-for-sale securities as of March 31, 2025 or December 31, 2024. 8 . Property and Equipment, Net Property and equipment, net, consisted of the following (in thousands): March 31, 2025 December 31, 2024 Lab equipment $ 706 $ 705 Leasehold improvements 1,090 1,090 Computer hardware and software 206 189 Furniture and fixtures 160 160 Property and equipment, gross 2,162 2,144 Less: accumulated depreciation and amortization ( 1,237 ) ( 1,119 ) Property and equipment, net $ 925 $ 1,025 Depreciation and amortization expense for the three months ended March 31, 2025 and 2024 was $ 118,000 and $ 114,000 , respectively . 9 . Accrued Expenses Accrued expenses consisted of the following (in thousands): March 31, 2025 December 31, 2024 Accrued compensation $ 1,380 $ 3,173 Accrued contract manufacturing costs 1,397 1,565 Accrued clinical trial costs 2,066 1,302 Accrued other 1,052 986 Total accrued expenses $ 5,895 $ 7,026 Accrued compensation includes severance costs. For further information see Note 12. 10. Share-Based Compensation Stock Options A summary of the Company’s stock option activity and related information is as follows: Options Outstanding Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Options outstanding - December 31, 2024 2,393,824 $ 23.54 7.90 $ 1 Granted 714,100 5.19 Exercised — — Expired ( 62,539 ) 44.16 Forfeited — — Options outstanding - March 31, 2025 3,045,385 $ 18.81 8.30 $ — Options exercisable - March 31, 2025 747,520 $ 32.90 4.39 $ — All outstanding options as of March 31, 2025 are expected to vest. 18 The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock as of March 31, 2025. The Company granted 8,449 performance-based shares, which are included in the table above, during the year ended December 31, 2023. There was no performance-based compensation expense for the three months ended March 31, 2025. The company recognized $ 21,000 in performance-based compensation expense for the three months ended March 31, 2024. The Company estimates stock awards fair value on the date of grant using the Black-Scholes valuation, with the vesting being subject to service requirements. The Company accounts for forfeitures when they occur. Restricted Stock Units (RSUs) RSUs vest based on a service requirement and a liquidity event plus service requirement. The following table summarizes RSU activities during the three months ended March 31, 2025: Number of Shares Weighted Average Grant Date Fair Value Unvested balance as of December 31, 2024 213,254 $ 22.88 Granted 6,049 4.30 Vested and released ( 82,239 ) 21.50 Forfeited — — RSUs outstanding - March 31, 2025 137,064 $ 22.89 Unvested balance as of March 31, 2025 137,064 $ 22.89 During the three months ended March 31, 2025, 4,481 shares were used to settle grantee's tax withholding obligations for vesting of restricted stock units. In addition to the RSUs in the table above, in connection with the Merger, the Company assumed 24,700 RSUs which were fully vested at the time of the Merger. The RSUs were releasable upon set timeframes after completion of the Merger. The 17,000 RSUs that were unreleased as of December 31, 2024 were released in January 2025. 2024 Employee Stock Purchase Plan In October 2024, the Board adopted the 2024 Employee Stock Purchase Plan (the “2024 ESPP”), which became effective immediately upon completion of the Merger. As of March 31, 2025, no shares have been issued under the 2024 ESPP. Share-Based Compensation Expense The following table shows the allocation of share-based compensation expense related to the Company’s share-based awards (in thousands) : Three Months Ended March 31, 2025 2024 Research and development $ 1,317 $ 37 General and administrative 1,428 70 Total $ 2,745 $ 107 11. Income Taxes In accordance with GAAP, a valuation allowance should be provided if it is more likely than not that some or all of the Company’s deferred tax assets will not be realized. The Company’s ability to realize the benefit of its 19 deferred tax assets will depend on the generation of future taxable income. Due to the uncertainty of future profitable operations and taxable income, the Company has recorded a full valuation allowance against its net deferred tax assets. The Company believes its tax filing positions and deductions related to tax periods subject to examination will be sustained upon audit and, therefore, has no reserve for uncertain tax positions. 12. Commitments and Contingencies Legal Proceedings Merger Proceedings In connection with the Merger, two complaints were filed in the Supreme Court of the State of New York, County of New York, captioned Thomas v. Reneo Pharmaceuticals, Inc., et al. , Index No. 654628/2024 (filed September 5, 2024) and Kent v. Reneo Pharmaceuticals, Inc., et al. , Index No. 654642/2024 (filed September 6, 2024) (together, the “Complaints”). The Complaints generally allege that the Proxy Statement/Prospectus filed by Reneo with the SEC misrepresented and/or omitted certain purportedly material information relating to Reneo management’s financial projections for Reneo and OnKure, the data and inputs underlying the financial valuation analyses that support the fairness opinion provided by Leerink Partners, Reneo’s financial advisor, and potential conflicts of interest with Leerink Partners LLC, Evercore Group L.L.C., and LifeSci Capital LLC, which were the placements agents for the Concurrent Financing that closed concurrently with the Merger. The Complaints assert violations of negligent misrepresentation and concealment in violation of New York common law and negligence in violation of New York common law. The Complaints sought orders enjoining the proposed Merger, or in the event that the Merger was consummated, orders rescinding the Merger or awarding actual and punitive damages, as well as all of the plaintiffs’ fees and expenses in connection with the litigation, including reasonable attorneys’ and experts’ fees and expenses. We cannot predict the outcome of the Complaints or any other litigation that might be filed arising out of the Merger or the Concurrent Financing. The Company and the individual defendants intend to vigorously defend against the Complaints and any subsequently filed, similar actions. It is possible additional lawsuits may be filed arising out of the Merger or the Concurrent Financing. Absent new or significantly different allegations, the Company will not necessarily disclose such additional filings. From time-to-time in the future, the Company could be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of business, which may have a material adverse effect on the Company’s consolidated results of operations or financial position. Indemnification In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its officers and members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs because of such indemnifications. The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its financial statements as of March 31, 2025. Severance A former officer of the Company terminated his employment with the Company on May 24, 2024 and entered into a separation agreement and release on that date. The separation agreement and release provides for payments and benefits including continuing payments of base salary for a period of 14 months following termination of employment, payment for or reimbursement for COBRA premiums for up to 14 months following termination of employment, a full accelerated vesting of his equity awards and extension of the post-termination exercise period applicable to his Options through the earlier of 12 months following termination of service or the applicable option expiration date. As of March 31, 2025 and December 31, 2024, $ 170,000 and $ 326,000 , respectively, remained unpaid and was included in accrued compensation. The related RSU shares were released in January 2025. No expense was recorded for these severance benefits for the three months ended March 31, 2025 or 2024. 20 Certain Reneo employees became employees of the Company to assist with the Merger transition through December 31, 2024 at which time they were terminated and received severance benefits in accordance with the Reneo severance agreements. As of March 31, 2025, the December 31, 2024 balance of $ 154,000 was fully paid . No expense was recorded for these severance benefits for the three months ended March 31, 2025 or 2024. 21